Michael S. Schmidt, Eric Lipton and Alexandra Stevenson

At a Midtown Manhattan steakhouse last June, William A. Ackman, the activist hedge fund manager who had bet a billion dollars on the collapse of the nutritional supplement company Herbalife, offered his latest evidence to a handful of other hedge fund managers about why the company's stock could soon plummet.

Mr Ackman told his dinner companions that Representative Linda T. Sanchez, Democrat of California, had sent a letter to the Federal Trade Commission the previous day calling for an investigation of the company.

The commission had not yet stamped the letter as received, nor had it been made public. But Mr Ackman, who had personally lobbied Ms. Sanchez and stood to profit if the companys stock dropped as a result of the call for an inquiry, already knew what it said, and read from a copy of it that he had on his cellphone.

When Ms Sanchez's office ultimately issued a news release a month later, it was backdated as though it had been made public the day before Mr Ackman's dinner talk.

The letter was a small hint of Mr Ackman's extraordinary attempt to leverage the corridors of power in Washington, state capitols and city halls for his hedge funds profit after taking a $US1 billion financial position called a short, a bet that will pay off only if Herbalife's stock drops.

Corporate money is forever finding new ways to influence government. But Mr Ackman's campaign to take this fight to the end of the earth, using every weapon in the arsenal that Washington offers in an attempt to bring ruin to one company, is a novel one, fusing the financial markets with the political system.

Others have criticised the business practices of Herbalife, a company that sells vitamins and other health supplements through independent distributors, many of whom are lower-income Latinos or African-Americans. But Mr Ackmans attack is unprecedented in its scale, and Herbalife officials strongly deny his accusations that the company is a pyramid scheme that stays afloat by constantly recruiting new distributors.

To pressure state and federal regulators to investigate Herbalife, an act that alone could cause its stock to dive, his team has helped organise protests, news conferences and letter-writing campaigns in California, Nevada, Connecticut, New York and Illinois, although several of the people who signed the letters to state and federal officials say they do not remember sending them, an investigation by The New York Times has found.

His team has also paid civil rights organisations at least $US130,000 to join his effort by helping him collect the names of people who claimed they were victimised by Herbalife in order to send the leads to regulators, the investigation found. Mr Ackmans team also provided the money used by some of these individuals to travel to Washington to participate in a rally against Herbalife last month.

Herbalife has mobilized its own army of lobbyists to defend itself against Mr Ackmans charges. These accusations are provably false, said Herbalifes chief financial officer, John G. DeSimone. And they can all be traced back to the same source: hedge fund billionaire Bill Ackman, who is motivated by one thing getting even richer by winning a billion-dollar bet he made against our company, by any means possible, no matter how unscrupulous.

The feud has touched off a bidding war of sorts, emails obtained by The New York Times show, as the advocacy groups have in some cases pressed Mr Ackmans team and Herbalife to contribute more money in exchange for their allegiance.

Mr Ackman is not new to playing chess on a billionaires scale. The brash 47-year-old, a graduate of Harvard Business School, built his $US12 billion, New York City-based hedge fund, Pershing Square Capital Management, on enormous, risky bets on companies like Jim Beam and Canadian Pacific Rail that earned billions for him and his clients. He has had some big losses too, including an estimated $US473 million last August on an investment in J. C. Penney, the struggling retailer.

Regulators frequently get entreaties from financiers urging action for their own financial gain, like the hedge fund executives who in 2010 tried to secretly push Obama administration officials to investigate for-profit colleges, again citing fraudulent industry practices, after betting that their stocks would decline.

But Mr Ackmans efforts illustrate how Washington is increasingly becoming a battleground of Wall Streets financial titans, whose interest in influencing public policy is driven primarily by a desire for profit part of an expanding practice in the nations capital, with corporations, law firms and lobbying practices establishing political intelligence units to gather news they can trade on.

So far, Mr Ackman has persuaded four members of Congress, a New York State senator, a City Council member in Boston, the majority leader of the Nevada Senate and other elected officials in California to join the cause. Prominent consumer advocates in Washington, as well as leaders of well-respected Hispanic and African-American community groups who have been lobbied by Mr Ackmans team, have also written regulators demanding action.

Mr Ackman has trumpeted the news conferences and protests to create the image that the walls were closing in on Herbalife, a company no stranger to controversy, whose sales reached a record $US4.8 billion last year.

He has argued that he is trying to protect Hispanics, who he says are most frequently recruited by Herbalife as distributors, only to find out that there is little money to be made.

Yet Mr Ackmans staff acknowledges that this crusade is really rooted in one goal: finding a way to undermine public confidence in Herbalife so that his $US1 billion bet will produce an equally enormous return. Mr Ackman has said he will donate any profits he personally earns to charity, calling it blood money. The clients who invest in his hedge fund, however, would still benefit enormously.

Brent A. Wilkes, the national executive director of the Washington-based League of United Latin American Citizens, or Lulac, rejected any suggestion that he had become Mr Ackmans tool even though his organisation accepted a $10,000 contribution early last year, and since then has taken a position at the forefront of the anti-Herbalife campaign.

Instead, Mr Ackmans bet is just helping draw attention to longstanding abusive practices by Herbalife, said Mr Wilkes, who acknowledged that he had never previously focused on the issue.

Its not the Latino groups that are helping Bill Ackman, Mr Wilkes said. Bill Ackman is helping the Latino groups. He has elevated this battle. On Sunday evening, after questions from The Times, Mr Wilkes said he had decided to return the donation, so there was no chance anyone could suspect he had undertaken the effort for a mere $10,000 table purchase at one of his fund-raising events.

Harvey L. Pitt, a former chairman of the Securities and Exchange Commission, said that Mr Ackmans campaign was starting to look like an effort to move the price rather than spread the truth.

If you are trying to spread the truth, that is OK, Mr Pitt said. If you are trying to move the price of a stock to vindicate your investment philosophy, thats not OK

Mr Ackman rejected the assertions that he had done anything wrong.

"Our goal here is to shine a spotlight on Herbalife and let the government know all the facts and motivate them to do something," Mr Ackman said in an interview on Sunday.

So far, Mr Ackman has little to show for his efforts. Herbalifes stock has climbed higher, in part because the billionaire investor Carl C. Icahn decided to buy a large stake in the company, and the regulators lobbied by Mr Ackman have not taken any formal action against the company.

That has not deterred Mr Ackman, who is not known to retreat from a risky investment without a fight, even if it takes years.

In February, 14 months after he announced he had wagered big money on the collapse of Herbalife, and with around $US500 million in paper losses so far, he announced that instead of backing down, he had made his bet even bigger.

If Herbalife were to disappear tomorrow, wed make a lot more than had it just blown up the day after I gave my last presentation although life would be a little easier, he told an audience of Wall Street investors and media attending an investor conference last month.

One of Mr Ackmans first stops in his crusade to bring Herbalife down was a meeting at the regional field headquarters of the SEC. in Lower Manhattan, where more than 400 enforcement lawyers, accountants, investigators and other staff members work to police some of the nations biggest corporate players.

He presented investigators in New York with a years worth of financial research that he said showed that Herbalife was misleading investors by failing to properly disclose that most of its sales were generated by simply recruiting more distributors, rather than by selling large amounts of its product to consumers.

Mr Ackman, according to people who were present at the briefing, pointed to internal company records that showed a large share of these distributors, recruited to join the sales teams based on extravagant predictions, quickly gave up.

He made other presentations, to investigators from the F.T.C. and state authorities, because he knew regulatory action would be among the quickest ways to make good on his prediction that the company's stock was going to crash.

"So the risk we took in making this investment was could we get the world to focus on a company, could it get enough of a spotlight so that the S.E.C., the F.T.C., the 50 attorney generals around the country, the equivalent regulators in 87 countries, if any one of them, or at least any powerful member of that group, could we get them interested?" Mr Ackman explained at the investors conference in February, 14 months after he made his bet on Herbalife public. "And I think that was the biggest risk we took in going short on Herbalife."